Effective IT Measurement and Reporting Strategies for Improved Business Performance

1. Chapter 13Measuring, Reporting, and Controlling Managing the Information Technology Resource Paula Goulding ICT622

2. Chapter Outline • Importance of measurement • What and how to measure • Quality and efficacy of measures • Reporting to different audiences • Controlling IT through effective SLAs • Negotiating a service level agreement • Making SLAs work – metrics • Introducing internal SLA to firm • SLA myths • Who owns measurements and what/when to do them • Can enterprise succeed with or without measurements? ICT622

3. Why Is There IT? ICT622

4. Productivity Study of IT and Business Executives Source: InformationWeek research productivity study of 300 IT and business executives ICT622

5. Measuring IT • IT expenditure as percent of revenue • IT expenditure per employee • Revenue per IT dollar • Total IT expense budget vs. actual • Total IT capital budget vs. actual • Employees supported per IT employee ICT622

6. Importance of Measurement • Business wants to know if IT is being run efficiently and effectively • Identify opportunities for improving effectiveness and efficiency • Effectiveness • Doing things right • Efficiency • Doing things the right way ICT622

7. Measuring IT – Samples • Overall – qualitative measures • Overall – quantitative measures • Network • Data center ICT622

8. What and How to Measure • Need to measure • Business impact • Customer relationships • Internal organization impact • Investment impact • Value chain impact • Know how processes are changing between any measurements, and explain any changes in results • No ideal set of metrics ICT622

9. 10-Step Approach to Developing Measurements • Commitment of resources, time, and cooperation from senior business and IT management • Have and review formal strategic plan, mission statements, and goals • Committees need to be established for each of 38 IT processes • Each committee meets and defines goals of each IT process as first objective • Identify critical success factors ICT622

10. 10-Step Approach to Developing Measurements • Establish guidelines to measure if, and to what degree, critical success factors have been met • Complete pilot should be done and members jointly participate in the pilot • Recommendation to install these measurements should be raised to senior management for endorsement • Distribution and implementation of new measures • Analyze results and review with all partners ICT622

11. 5 Stages of Benchmarking • Planning • Analysis • Integration • Action • Maturity Source: Robert C. Camp and http://www.apqc.org ICT622

12. Planning Identify what is to be benchmarked Identify comparative companies Determine data collection method and collect data Analysis Determine current performance “gap” Project future performance levels Benchmarks ICT622

13. Integration Communicate benchmark findings and gain acceptance Establish functional goals Action Develop action plans Implement specific actions and monitor progress Recalibrate benchmarks Maturity Leadership position attained and practices fully integrated into process Benchmarks ICT622

14. Iterative Process for Benchmarking Source: Dataquest, Gartner Group. ICT622

15. Quality of Measures • Often best when forecasting trends • Can lead to misleading results • Gain correct insight as to what measurement indicates • Good quality may be significant indicator of good performance ICT622

16. Dimensions of Service Quality • Reliability • Consistency of performance and dependability • Responsiveness • Willingness/readiness of employees to provide service in timely manner • Competence • Possession of required skills to perform service • Access • Approachability and ease of contact • Courtesy • Politeness, respect, consideration, friendliness ICT622

17. Dimensions of Service Quality • Communications • Keeping customers informed in language they understand • Credibility • Trustworthiness, believability, honesty • Security • Freedom from danger, risk, doubt • Understanding/Knowing the Customer • Making effort to understand customer’s needs • Tangibles • Physical evidence of service ICT622

18. Dimensions of Successful IT Functions • Service quality • System quality • Information quality • Use • User satisfaction • Individual impact • Work group impact • Organizational impact ICT622

19. Source: Anthony, R.N. Planning and Control Systems: A Framework for Analysis, Cambridge, MA: Harvard University Press (1965). ICT622

20. Variety in Reporting • Historical Data • Statistical Data • Assist managers in determining repairs • Each has different characteristics ICT622

21. Characteristics of Effective SLAs • Based on current “user” expectation • Defined by location, function, and service type • Uses benchmarks and baselines for measuring performance • Specifies minimums, penalties, and incentives • Specifies reports and tracking tools to be monitored • Agreement not too few, not too many • Gets adjusted periodically to reflect changes ICT622

22. Negotiating a SLA • Get a Baseline • Define Responsibility • Allow for Modifications • Ensure Reports Are in Terms Anyone Can Understand • Don’t Forget the End-User Experience ICT622

23. Examples of Service Level Metrics • Application availability • Average application response time • Number of application crashes per unit of time • Average throughout • Network availability and bandwidth • Server availability ICT622

24. Examples of Service Level Metrics • Elapse time to repair hardware failure • Mean time between server failure • Number of operating system failure per unit of time • Number of middleware failure per unit of time • Number of production jobs not completed during batch night shift ICT622

25. Questions Concerning Who Owns Measurement • Who should own measurement? • Is measure a process that should be owned by the people doing the measurement? • Is it a corporate asset or cost? • Is this question similar to who should own payroll? • Should the owners of internal processes that are being measured simply own it? • Does it make a difference? ICT622

26. What to do with Measurements • Establish report card for performance • Create effective and understandable benchmarks • Senior management needs to know current status and effectiveness of IT ICT622

27. Performance Measures for Efficient Order Management • Short order lead times • In-stock availability • Order accuracy • Access to order status information • Response time to customer inquiries ICT622

28. Performance Measures for Efficient Customer Management • Lower inventory carrying cost • Reduced human intervention • Greater order accuracy • Improved production planning/forecasting • Lower order administration • Lower number of complaints • Improved customer decision making based on preferences • Increase number of automatic restocking customers • Lower stock-out occurrences ICT622

29. When Measurements Should be Done • Continuously • Daily • Weekly • Monthly • Semiannually • Annually ICT622

30. Can Enterprise Succeed Without Measurement? • Only 42% of companies prepare business case for CRM project • Only 45% have centralized CRM responsibility • 57% can’t justify investments because they don’t know how to measure customer profitability • Only 10% measure ROI ICT622

31. How Does Enterprise Benefit from Measurement? • Performance is related to effectiveness, efficiency, and quality • To understand process it must be measured and compared • Part of monitoring project performance • Determine if vendors are performing to service level agreements ICT622